The insured sought relief from the ensuing loss provision when the wear and tear exclusion barred coverage. Rapid Park Indus. v. Great N. Ins. Co., 2012 U.S. App. LEXIS 23107 (2nd Cir. Nov. 9, 2012).

    The insureds leased and operated a parking garage on the lower levels of a building in Manhattan. The City's Department of Buildings Issued a vacate order for failing to maintain the garage. The garage was closed and padlocked by the City.

   The insured filed a claim for business interruption with Great Northern. The claim was denied, based in part on the wear and tear exclusion. 

   The insured sued Great Northern for breach of contract and bad faith. The insured argued the wear and tear exclusion did not apply, and even if it did, the ensuing loss exception preserved coverage. The district court [decision reviewed here] granted summary judgment to Great Northern.

   The Second Circuit affirmed. First, the District Court correctly held that the wear and tear exclusion was applicable. Second, the ensuing loss exception was not applicable. The insureds argued that the water that originally seeped into the garage resulted in its deterioration. But this damage was not "ensuing." in the sense that it was a separate, subsequent event that occurred due to the deterioration. Instead, it was directly related to the original excluded risk, which New York courts excluded from the "ensuing loss" exception.